EEOC NOTICE
Number 915.002
Date July 10, 1997
1. SUBJECT: Policy Statement on Mandatory Binding Arbitration
of Employment Discrimination Disputes as a Condition of
Employment
2. PURPOSE: This policy statement sets out the Commission’s
policy on the mandatory binding arbitration of employment
discrimination disputes imposed as a condition of employment.
3. EFFECTIVE DATE: Upon issuance.
4. EXPIRATION DATE: As an exception to EEOC Order 205.001,
Appendix B, Attachment 4, § a(5), this Notice will remain in
effect until rescinded or superseded.
5. ORIGINATOR: Coordination and Guidance Programs, Office of
Legal Counsel.
6. INSTRUCTIONS: File in Volume II of the EEOC Compliance
Manual.
7. SUBJECT MATTER:
The United States Equal Employment Opportunity Commission
(EEOC or Commission), the federal agency charged with the
interpretation and enforcement of this nation’s employment
discrimination laws, has taken the position that agreements that
mandate binding arbitration of discrimination claims as a
condition of employment are contrary to the fundamental
principles evinced in these laws. EEOC Motions on Alternative
Dispute Resolution, Motion 4 (adopted Apr. 25, 1995), 80 Daily
Lab. Rep. (BNA) E-1 (Apr. 26, 1995).1 This policy statement sets
out in further detail the basis for the Commission’s position.
I. Background
An increasing number of employers are requiring as a
condition of employment that applicants and employees give up
their right to pursue employment discrimination claims in court
and agree to resolve disputes through binding arbitration. These
agreements may be presented in the form of an employment contract
or be included in an employee handbook or elsewhere. Some
employers have even included such agreements in employment
applications. The use of these agreements is not limited
to particular industries, but can be found in various sectors of
the workforce, including, for example, the securities industry,
retail, restaurant and hotel chains, health care, broadcasting,
and security services. Some individuals subject to mandatory
arbitration agreements have challenged the enforceability of
these agreements by bringing employment discrimination actions in
the courts. The Commission is not unmindful of the case law
enforcing specific mandatory arbitration agreements, in
particular, the Supreme Court’s decision in Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 33 (1991).2 Nonetheless,
for the reasons stated herein, the Commission believes that such
agreements are inconsistent with the civil rights laws.
II. The Federal Civil Rights Laws Are Squarely Based In This
Nation’s History And Constitutional Framework And Are Of A
Singular National Importance
Federal civil rights laws, including the laws prohibiting
discrimination in employment, play a unique role in American
jurisprudence. They flow directly from core Constitutional
principles, and this nation's history testifies to their
necessity and profound importance. Any analysis of the mandatory
arbitration of rights guaranteed by the employment discrimination
laws must, at the outset, be squarely based in an understanding
of the history and purpose of these laws.
Title VII of the historic Civil Rights Act of 1964, 42
U.S.C. § 2000e et seq., was enacted to ensure equal
opportunity in employment, and to secure the fundamental right to
equal protection guaranteed by the Fourteenth Amendment to the
Constitution.3 Congress considered this national policy against
discrimination to be of the "highest priority" (Newman v. Piggie
Park Enters., 390 U.S. 400, 402 (1968)), and of "paramount
importance" (H.R. Rep. No. 88-914, pt. 2 (1963) (separate views
of Rep. McCulloch et al.)),4 reprinted in 1964 Leg. Hist. at
2123.5 The Civil Rights Act of 1964, 42 U.S.C. § 2000a et
seq., was intended to conform "[t]he practice of American
democracy . . . to the spirit which motivated the Founding
Fathers of this Nation -- the ideals of freedom, equality,
justice, and opportunity." H.R. Rep. No. 88-914, pt. 2 (1963)
(separate views of Rep. McCulloch et al.), reprinted in 1964 Leg.
Hist. at 2123. President John F. Kennedy, in addressing the
nation regarding his intention to introduce a comprehensive civil
rights bill, stated the issue as follows:
We are confronted primarily with a moral issue. It is as
old as the Scriptures and it is as clear as the American
Constitution.
The heart of the question is whether all Americans are to be
afforded equal rights and equal opportunities, whether we
are going to treat our fellow Americans as we want to be
treated.
President John F. Kennedy's Radio and Television Report to the
American People on Civil Rights (June 11, 1963), Pub. Papers 468,
469 (1963).6
Title VII is but one of several federal employment
discrimination laws enforced by the Commission which are "part of
a wider statutory scheme to protect employees in the workplace
nationwide," McKennon v. Nashville Banner Publ'g Co., 513 U.S.
352, 357 (1995). See the Equal Pay Act of 1963 ("EPA"), 29
U.S.C. § 206(d); the Age Discrimination in Employment Act of
1967 ("ADEA"), 29 U.S.C. §§ 621 et seq.; and the
Americans with Disabilities Act of 1990 ("ADA"), 42 U.S.C.
§§ 12101 et seq. The ADEA was enacted "as part of an
ongoing congressional effort to eradicate discrimination in the
workplace" and "reflects a societal condemnation of invidious
bias in employment decisions." McKennon, 513 U.S. at 357. The
ADA explicitly provides that its purpose is, in part, to invoke
congressional power to enforce the Fourteenth Amendment. 29
U.S.C. § 12101(b)(4). Upon signing the ADA, President
George Bush remarked that "the American people have once again
given clear expression to our most basic ideals of freedom and
equality." President George Bush's Statement on Signing the
Americans with Disabilities Act of 1990 (July 26, 1990), Pub.
Papers 1070 (1990 Book II).
III. The Federal Government Has The Primary Responsibility
For The Enforcement Of The Federal Employment Discrimination Laws
The federal employment discrimination laws implement
national values of the utmost importance through the institution
of public and uniform standards of equal opportunity in the
workplace. See text and notes supra in Section II. Congress
explicitly entrusted the primary responsibility for the
interpretation, administration, and enforcement of these
standards, and the public values they embody, to the federal
government. It did so in three principal ways. First, it
created the Commission, initially giving it authority to
investigate and conciliate claims of discrimination and to
interpret the law, see §§ 706(b) and 713 of Title VII,
42 U.S.C. §§ 2000e-5(b) and 2000e-12, and subsequently
giving it litigation authority in order to bring cases in court
that it could not administratively resolve, see § 706(f)(1)
of Title VII, 42 U.S.C. § 2000e-5(f)(1). Second, Congress
granted certain enforcement authority to the Department of
Justice, principally with regard to the litigation of cases
involving state and local governments. See §§
706(f)(1) and 707 of Title VII, 42 U.S.C. §§ 2000e-
5(f)(1) and 2000e-6. Third, it established a private right of
action to enable aggrieved individuals to bring their claims
directly in the federal courts, after first administratively
bringing their claims to the Commission. See § 706(f)(1) of
Title VII, 42 U.S.C. § 2000e-5(f)(1).7
While providing the states with an enforcement role, see 42
U.S.C. §§ 2000e-5(c) and (d), as well as recognizing
the importance of voluntary compliance by employers, see 42
U.S.C. § 2000e-5(b), Congress emphasized that it is the
federal government that has ultimate enforcement responsibility.
As Senator Humphrey stated, "[t]he basic rights protected by
[Title VII] are rights which accrue to citizens of the United
States; the Federal Government has the clear obligation to see
that these rights are fully protected." 110 Cong. Rec. 12725
(1964). Cf. General Tel. Co. v. EEOC, 446 U.S. 318, 326 (1980)
(in bringing enforcement actions under Title VII, the EEOC "is
guided by 'the overriding public interest in equal employment
opportunity . . . asserted through direct Federal enforcement'")
(quoting 118 Cong. Rec. 4941 (1972)).
The importance of the federal government's role in the
enforcement of the civil rights laws was reaffirmed by Congress
in the ADA, which explicitly provides that its purposes include
"ensur[ing] that the Federal Government plays a central role in
enforcing the standards established in [the ADA] on behalf of
individuals with disabilities." 42 U.S.C. § 12101(b)(3).
IV. Within This Framework, The Federal Courts Are Charged
With The Ultimate Responsibility For Enforcing The Discrimination
Laws
While the Commission is the primary federal agency
responsible for enforcing the employment discrimination laws, the
courts have been vested with the final responsibility for
statutory enforcement through the construction and interpretation
of the statutes, the adjudication of claims, and the issuance of
relief.8 See, e.g., Kremer v. Chemical Constr. Corp., 454 U.S.
461, 479 n.20 (1982) ("federal courts were entrusted with
ultimate enforcement responsibility" of Title VII); New York
Gaslight Club, Inc. v. Carey, 447 U.S. 54, 64 (1980) ("Of course
the 'ultimate authority' to secure compliance with Title VII
resides in the federal courts").9
A. The Courts Are Responsible For The Development And
Interpretation Of The Law
As the Supreme Court emphasized in Alexander v. Gardner-
Denver Co., 415 U.S. 36, 57 (1974), "the resolution of statutory
or constitutional issues is a primary responsibility of courts,
and judicial construction has proved especially necessary with
respect to Title VII, whose broad language frequently can be
given meaning only by reference to public law concepts." This
principle applies equally to the other employment discrimination
statutes.
While the statutes set out the basic parameters of the law,
many of the fundamental legal principles in discrimination
jurisprudence have been developed through judicial
interpretations and case law precedent. Absent the role of the
courts, there might be no discrimination claims today based on,
for example, the adverse impact of neutral practices not
justified by business necessity, see Griggs v. Duke Power Co.,
401 U.S. 424 (1971), or sexual harassment, see Harris v. Forklift
Sys., Inc., 510 U.S. 17 (1993); Meritor Savings Bank, FSB v.
Vinson, 477 U.S. 57 (1986). Yet these two doctrines have proved
essential to the effort to free the workplace from unlawful
discrimination, and are broadly accepted today as key elements of
civil rights law.
B. The Public Nature Of The Judicial Process Enables The
Public, Higher Courts, And Congress To Ensure That The
Discrimination Laws Are Properly Interpreted And Applied
Through its public nature -- manifested through published
decisions -- the exercise of judicial authority is subject to
public scrutiny and to system-wide checks and balances designed
to ensure uniform expression of and adherence to statutory
principles. When courts fail to interpret or apply the
antidiscrimination laws in accord with the public values
underlying them, they are subject to correction by higher level
courts and by Congress.
These safeguards are not merely theoretical, but have
enabled both the Supreme Court and Congress to play an active
and continuing role in the development of employment
discrimination law. Just a few of the more recent Supreme Court
decisions overruling lower court errors include: Robinson v.
Shell Oil Co., 117 S. Ct. 843 (1997) (former employee may bring a
claim for retaliation); O'Connor v. Consolidated Coin Caterers,
Corp., 116 S. Ct. 1307 (1996) (comparator in age discrimination
case need not be under forty); McKennon, 513 U.S. 352 (employer
may not use after-acquired evidence to justify discrimination);
and Harris 510 U.S. 17 (no requirement that sexual harassment
plaintiffs prove psychological injury to state a claim).
Congressional action to correct Supreme Court departures
from congressional intent has included, for example, legislative
amendments in response to Court rulings that: pregnancy
discrimination is not necessarily discrimination based on sex
(General Elec. Co. v. Gilbert, 429 U.S. 125 (1978), and Nashville
Gas Co. v. Satty, 434 U.S. 136 (1977), overruled by Pregnancy
Discrimination Act of 1978); that an employer does not have the
burden of persuasion on the business necessity of an employment
practice that has a disparate impact (Wards Cove Packing Co. v.
Atonio, 490 U.S. 642 (1989), overruled by §§ 104 and
105 of the Civil Rights Act of 1991); that an employer avoids
liability by showing that it would have taken the same action
absent any discriminatory motive (Price Waterhouse v. Hopkins,
490 U.S. 228 (1989), overruled, in part, by § 107 of the
Civil Rights Act of 1991); that mandatory retirement pursuant to
a benefit plan in effect prior to enactment of the ADEA is not
prohibited age discrimination (United Air Lines, Inc. v. McMann,
434 U.S. 192 (1977), overruled by 1978 ADEA amendments); and,
that age discrimination in fringe benefits is not unlawful
(Public Employees Retirement Sys. of Ohio v. Betts, 492 U.S. 158
(1989), overruled by Older Workers Benefits Protection Act of
1990).
C. The Courts Play A Crucial Role In Preventing And
Deterring Discrimination And In Making Discrimination Victims
Whole
The courts also play a critical role in preventing and
deterring violations of the law, as well as providing remedies
for discrimination victims. By establishing precedent, the
courts give valuable guidance to persons and entities covered by
the laws regarding their rights and responsibilities, enhancing
voluntary compliance with the laws. By awarding damages,
backpay, and injunctive relief as a matter of public record, the
courts not only compensate victims of discrimination, but provide
notice to the community, in a very tangible way, of the costs of
discrimination. Finally, by issuing public decisions and orders,
the courts also provide notice of the identity of violators of
the law and their conduct. As has been illustrated time and
again, the risks of negative publicity and blemished business
reputation can be powerful influences on behavior.
D. The Private Right Of Action With Its Guarantee Of
Individual Access To The Courts Is Essential To The Statutory
Enforcement Scheme
The private right of access to the judicial forum to
adjudicate claims is an essential part of the statutory
enforcement scheme. See, e.g., McKennon, 513 U.S. at 358
(granting a right of action to an injured employee is "a vital
element" of Title VII, the ADEA, and the EPA). The courts cannot
fulfill their enforcement role if individuals do not have access
to the judicial forum. The Supreme Court has cautioned that,
"courts should ever be mindful that Congress . . . thought it
necessary to provide a judicial forum for the ultimate resolution
of discriminatory employment claims. It is the duty of courts to
assure the full availability of this forum." Gardner-Denver, 415
U.S. at 60 n.21.10
Under the enforcement scheme for the federal employment
discrimination laws, individual litigants act as "private
attorneys general." In bringing a claim in court, the civil
rights plaintiff serves not only her or his private interests,
but also serves as "the chosen instrument of Congress to
vindicate 'a policy that Congress considered of the highest
priority.'" Christiansburg Garment Co. v. EEOC, 434 U.S. 412,
418 (1978) (quoting Newman v. Piggie Park Enters., Inc., 390 U.S.
400, 402 (1968)). See also McKennon, 513 U.S. at 358 ("[t]he
private litigant who seeks redress for his or her injuries
vindicates both the deterrence and compensation objectives of
the ADEA").
V. Mandatory Arbitration Of Employment Discrimination
Disputes "Privatizes" Enforcement Of The Federal Employment
Discrimination Laws, Thus Undermining Public Enforcement Of The
Laws
The imposition of mandatory arbitration agreements as a
condition of employment substitutes a private dispute resolution
system for the public justice system intended by Congress to
govern the enforcement of the employment discrimination laws.
The private arbitral system differs in critical ways from the
public judicial forum and, when imposed as a condition of
employment, it is structurally biased against applicants and
employees.
A. Mandatory Arbitration Has Limitations That Are
Inherent And Therefore Cannot Be Cured By The Improvement Of
Arbitration Systems
That arbitration is substantially different from litigation
in the judicial forum is precisely the reason for its use as a
form of ADR. Even the fairest of arbitral mechanisms will differ
strikingly from the judicial forum.
1. The Arbitral Process Is Private In Nature And
Thus Allows For Little Public Accountability
The nature of the arbitral process allows -- by design --
for minimal, if any, public accountability of arbitrators or
arbitral decision-making. Unlike her or his counterparts in the
judiciary, the arbitrator answers only to the private parties to
the dispute, and not to the public at large. As the Supreme
Court has explained:
A proper conception of the arbitrator's function is basic.
He is not a public tribunal imposed upon the parties by
superior authority which the parties are obliged to accept.
He has no general charter to administer justice for a
community which transcends the parties. He is rather part
of a system of self-government created by and confined to
the parties. . . .
United Steelworkers of Am. v. Warrior and Gulf Navigation Co.,
363 U.S. 574, 581 (1960) (quoting from Shulman, Reason, Contract,
and Law in Labor Relations, 68 Harv. L. Rev. 999, 1016 (1955)).
The public plays no role in an arbitrator's selection; s/he
is hired by the private parties to a dispute. Similarly, the
arbitrator's authority is defined and conferred, not by public
law, but by private agreement.11 While the courts are charged
with giving force to the public values reflected in the
antidiscrimination laws, the arbitrator proceeds from a far
narrower perspective: resolution of the immediate dispute. As
noted by one commentator, "[a]djudication is more likely to do
justice than . . . arbitration . . . precisely because it vests
the power of the state in officials who act as trustees for the
public, who are highly visible, and who are committed to reason."
Owen Fiss, Out of Eden, 94 Yale L.J. 1669, 1673 (1985).
Moreover, because decisions are private, there is little, if
any, public accountability even for employers who have been
determined to have violated the law. The lack of public
disclosure not only weakens deterrence (see discussion supra at
8), but also prevents assessment of whether practices of
individual employers or particular industries are in need of
reform. "The disclosure through litigation of incidents or
practices which violate national policies respecting
nondiscrimination in the work force is itself important, for the
occurrence of violations may disclose patterns of noncompliance
resulting from a misappreciation of [Title VII's] operation or
entrenched resistance to its commands, either of which can be of
industry-wide significance." McKennon, 513 U.S. at 358-59.
2. Arbitration, By Its Nature, Does Not Allow For
The Development Of The Law
Arbitral decisions may not be required to be written or
reasoned, and are not made public without the consent of the
parties. Judicial review of arbitral decisions is limited to
the narrowest of grounds.12 As a result, arbitration affords no
opportunity to build a jurisprudence through precedent.13
Moreover, there is virtually no opportunity for meaningful
scrutiny of arbitral decision-making. This leaves higher courts
and Congress unable to act to correct errors in statutory
interpretation. The risks for the vigorous enforcement of the
civil rights laws are profound. See discussion supra at section
IV. B.
3. Additional Aspects Of Arbitration Systems Limit
Claimants’ Rights In Important Respects
Arbitration systems, regardless of how fair they may be,
limit the rights of injured individuals in other important ways.
To begin with, the civil rights litigant often has available the
choice to have her or his case heard by a jury of peers, while in
the arbitral forum juries are, by definition, unavailable.
Discovery is significantly limited compared with that available
in court and permitted under the Federal Rules of Civil
Procedure. In addition, arbitration systems are not suitable for
resolving class or pattern or practice claims of discrimination.
They may, in fact, protect systemic discriminators by forcing
claims to be adjudicated one at a time, in isolation, without
reference to a broader -- and more accurate -- view of an
employer's conduct.
B. Mandatory Arbitration Systems Include Structural
Biases Against Discrimination Plaintiffs
In addition to the substantial and inevitable differences
between the arbitral and judicial forums that have already been
discussed, when arbitration of employment disputes is imposed as
a condition of employment, bias inheres against the employee.14
First, the employer accrues a valuable structural advantage
because it is a "repeat player." The employer is a party to
arbitration in all disputes with its employees. In contrast, the
employee is a "one-shot player"; s/he is a party to arbitration
only in her or his own dispute with the employer. As a result,
the employee is generally less able to make an informed selection
of arbitrators than the employer, who can better keep track of an
arbitrator's record. In addition, results cannot but be
influenced by the fact that the employer, and not the employee,
is a potential source of future business for the arbitrator.15 A
recent study of nonunion employment law cases16 found that the
more frequent a user of arbitration an employer is, the better
the employer fares in arbitration.17
In addition, unlike voluntary post-dispute arbitration --
which must be fair enough to be attractive to the employee -- the
employer imposing mandatory arbitration is free to manipulate the
arbitral mechanism to its benefit. The terms of the private
agreement defining the arbitrator’s authority and the arbitral
process are characteristically set by the more powerful party,
the very party that the public law seeks to regulate. We are
aware of no examples of employees who insist on the mandatory
arbitration of future statutory employment disputes as a
condition of accepting a job offer -- the very suggestion seems
far-fetched. Rather, these agreements are imposed by employers
because they believe them to be in their interest, and they are
made possible by the employer's superior bargaining power. It is
thus not surprising that many employer-mandated arbitration
systems fall far short of basic concepts of fairness. Indeed,
the Commission has challenged -- by litigation, amicus curiae
participation, or Commissioner charge -- particular mandatory
arbitration agreements that include provisions flagrantly
eviscerating core rights and remedies that are available under
the civil rights laws.18
The Commission's conclusions in this regard are consistent
with those of other analyses of mandatory arbitration. The
Commission on the Future of Worker-Management Relations (the
"Dunlop Commission") was appointed by the Secretary of Labor and
the Secretary of Commerce to, in part, address alternative means
to resolve workplace disputes. In its Report and Recommendations
(Dec. 1994) ("Dunlop Report"), the Dunlop Commission found that
recent employer experimentation with arbitration has produced a
range of programs that include "mechanisms that appear to be of
dubious merit for enforcing the public values embedded in our
laws." Dunlop Report at 27. In addition, a report by the U.S.
General Accounting Office, surveying private employers' use of
ADR mechanisms, found that existing employer arbitration systems
vary greatly and that "most" do not conform to standards
recommended by the Dunlop Commission to ensure fairness. See
"Employment Discrimination: Most Private-Sector Employers Use
Alternative Dispute Resolution" at 15, HEHS-95-150 (July 1995).
The Dunlop Commission strongly recommended that binding
arbitration agreements not be enforceable as a condition of
employment:
The public rights embodied in state and federal employment
law -- such as freedom from discrimination in the workplace
. . . -- are an important part of the social and economic
protections of the nation. Employees required to accept
binding arbitration of such disputes would face what for
many would be an inappropriate choice: give up your right to
go to court, or give up your job.
Dunlop Report at 32. The Brock Commission (see supra n.13)
agreed with the Dunlop Commission’s opposition to mandatory
arbitration of employment disputes and recommended that all
employee agreements to arbitrate be voluntary and post-dispute.
Brock Report at 81-82. In addition, the National Academy of
Arbitrators recently issued a statement opposing mandatory
arbitration as a condition of employment "when it requires waiver
of direct access to either a judicial or administrative forum for
the pursuit of statutory rights." See National Academy of
Arbitrators’ Statement and Guidelines (adopted May 21, 1997), 103
Daily Lab. Rep. (BNA) E-1 (May 29, 1997).
C. Mandatory Arbitration Agreements Will Adversely
Affect The Commission’s Ability To Enforce The Civil Rights Laws
The trend to impose mandatory arbitration agreements as a
condition of employment also poses a significant threat to the
EEOC's statutory responsibility to enforce the federal employment
discrimination laws. Effective enforcement by the Commission
depends in large part on the initiative of individuals to report
instances of discrimination to the Commission. Although
employers may not lawfully deprive individuals of their statutory
right to file employment discrimination charges with the EEOC or
otherwise interfere with individuals' protected participation in
investigations or proceedings under these laws,19 employees who
are bound by mandatory arbitration agreements may be unaware that
they nonetheless may file an EEOC charge. Moreover, individuals
are likely to be discouraged from coming to the Commission when
they know they will be unable to litigate their claims in
court.20 These chilling effects on charge filing undermine the
Commission's enforcement efforts by decreasing channels of
information, limiting the agency's awareness of potential
violations of law, and impeding its ability to investigate
possible unlawful actions and attempt informal resolution.
VI. Voluntary, Post-Dispute Agreements To Arbitrate
Appropriately Balance The Legitimate Goals Of Alternate Dispute
Resolution And The Need To Preserve The Enforcement Framework Of
The Civil Rights Laws
The Commission is on record in strong support of voluntary
alternative dispute resolution programs that resolve employment
discrimination disputes in a fair and credible manner, and are
entered into after a dispute has arisen. We reaffirm that
support here. This position is based on the recognition that
while even the best arbitral systems do not afford the benefits
of the judicial system, well-designed ADR programs, including
binding arbitration, can offer in particular cases other valuable
benefits to civil rights claimants, such as relative savings in
time and expense.21 Moreover, we recognize that the judicial
system is not, itself, without drawbacks. Accordingly, an
individual may decide in a particular case to forego the judicial
forum and resolve the case through arbitration. This is
consistent with civil rights enforcement as long as the
individual's decision is freely made after a dispute has
arisen.22
VII. Conclusion
The use of unilaterally imposed agreements mandating binding
arbitration of employment discrimination disputes as a condition
of employment harms both the individual civil rights claimant and
the public interest in eradicating discrimination. Those whom
the law seeks to regulate should not be permitted to exempt
themselves from federal enforcement of civil rights laws. Nor
should they be permitted to deprive civil rights claimants of the
choice to vindicate their statutory rights in the courts -- an
avenue of redress determined by Congress to be essential to
enforcement.
Processing Instructions For The Field And Headquarters
1. Charges should be taken and processed in conformity
with priority charge processing procedures regardless of whether
the charging party has agreed to arbitrate employment disputes.
Field offices are instructed to closely scrutinize each charge
involving an arbitration agreement to determine whether the
agreement was secured under coercive circumstances (e.g., as a
condition of employment). The Commission will process a charge
and bring suit, in appropriate cases, notwithstanding the
charging party’s agreement to arbitrate.
2. Pursuant to the statement of priorities in the
National Enforcement Plan, see § B(1)(h), the Commission
will continue to challenge the legality of specific agreements
that mandate binding arbitration of employment discrimination
disputes as a condition of employment. See, e.g., Briefs of the
EEOC as Amicus Curiae in Seus v. John Nuveen & Co., No. 96-CV-
5971 (E.D. Pa.) (Br. filed Jan. 11, 1997); Gibson v. Neighborhood
Health Clinics, Inc., No. 96-2652 (7th Cir.) (Br. filed Sept. 23,
1996); Johnson v. Hubbard Broadcasting, Inc., No. 4-96-107 (D.
Minn.) (Br. Filed May 17, 1996); Great Western Mortgage Corp. v.
Peacock, No. 96-5273 (3d Cir.) (Br. filed July 24, 1996).
/s/
_________________ __________________
Date Gilbert F. Casellas
Chairman
1. Although binding arbitration does not, in and of itself,
undermine the purposes of the laws enforced by the EEOC, the
Commission believes that this is the result when it is imposed as
a term or condition of employment.
2. The Gilmer decision is not dispositive of whether
employment agreements that mandate binding arbitration of
discrimination claims are enforceable. As explicitly noted by
the Court, the arbitration agreement at issue in Gilmer was not
contained in an employment contract. 500 U.S. at 25 n.2. Even
if Gilmer had involved an agreement with an employer, the issue
would remain open given the active role of the legislative branch
in shaping the development of employment discrimination law. See
discussion infra at section IV. B.
3. See, e.g., H.R. Rep. No. 88-914, pt. 1 (1963),
reprinted in United States Equal Employment Opportunity
Commission, Legislative History of Title VII and XI of the Civil
Rights Act of 1964 ("1964 Leg. Hist.") at 2016 (the Civil Rights
Act of 1964 was "designed primarily to protect and provide more
effective means to enforce. . . civil rights"); H.R. Rep. No.88-
914, pt.2 (1963) (separate views of Rep. McCulloch et al.),
reprinted in 1964 Leg. Hist. at 2122 ("[a] key purpose of the
bill . . . is to secure to all Americans the equal protection of
the laws of the United States and of the several States");
Charles & Barbara Whalen, The Longest Debate: A legislative
history of the 1964 Civil Rights Act 104 (1985) (opening
statement of Rep. Celler on House debate of H.R. 7152: "The
legislation before you seeks only to honor the constitutional
guarantees of equality under the law for all. . . . [W]hat it
does is to place into balance the scales of justice so that the
living force of our Constitution shall apply to all people . . .
."); H.R. Rep. No. 92-238 (1971), reprinted in Senate Committee
on Labor and Public Welfare, Subcommittee on Labor, Legislative
History of the Equal Employment Opportunity Act of 1972 ("1972
Leg. Hist.") at 63 (1972 amendments to Title VII are a
"reaffirmation of our national policy of equal opportunity in
employment").
4. William McCulloch (R-Ohio) was the ranking Republican of
Subcommittee No. 5 of the House Judiciary Committee, to which the
civil rights bill (H.R. 7152) was referred for initial
consideration by Congress. McCulloch was among the individuals
responsible for working out a compromise bill that was ultimately
substituted by the full Judiciary Committee for the bill reported
out by Subcommittee No. 5. His views, which were joined by six
members of Congress, are thus particularly noteworthy.
5. See also Albemarle Paper Co. v. Moody, 422 U.S. 405,
416 (1975) (The Civil Rights Act of 1964 is a "complex
legislative design directed at an historic evil of national
proportions").
6. Commitment to our national policy to eradicate
discrimination continues today to be of the utmost importance.
As President Clinton stated in his second inaugural address:
Our greatest responsibility is to embrace a new spirit of
community for a new century . . . . The challenge of our past
remains the challenge of our future: Will we be one Nation, one
people, with one common destiny, or not? Will we all come
together, or come apart?
The divide of race has been America's constant curse. And
each new wave of immigrants gives new targets to old prejudices .
. . . These forces have nearly destroyed our Nation in the past.
They plague us still.
President William J. Clinton's Inaugural Address (Jan. 20, 1997),
33 Weekly Comp. Pres. Doc. 61 (Jan. 27, 1997).
7. Section 107 of the ADA specifically incorporates the
powers, remedies, and procedures set forth in Title VII with
respect to the Commission, the Attorney General, and aggrieved
individuals. See 42 U.S.C.§ 12117. Similar enforcement
provisions are contained in the ADEA. See 29 U.S.C. §§
626 and 628.
8. In addition, unlike arbitrators, courts have coercive
authority, such as the contempt power, which they can use to
secure compliance.
9. See also H.R. Rep. No. 88-914, pt.2 (1963) (separate
views of Rep. McCulloch et al.), reprinted in 1964 Leg. Hist. at
2150 (explaining that EEOC was not given cease-and-desist powers
in the final House version of the Civil Rights Act of 1964, H.R.
7152, because it was "preferred that the ultimate determination
of discrimination rest with the Federal judiciary").
10. See also 118 Cong. Rec. S7168 (March 6, 1972)
(section-by-section analysis of H.R. 1746, the Equal Opportunity
Act of 1972, as agreed to by the conference committees of each
House; analysis of § 706(f)(1) provides that, while it is
hoped that most cases will be handled through the EEOC with
recourse to a private lawsuit as the exception, "as the
individual's rights to redress are paramount under the provisions
of Title VII it is necessary that all avenues be left open for
quick and effective relief").
11. Article III of the Constitution provides federal judges
with life tenure and salary protection to safeguard the
independence of the judiciary. No such safeguards apply to the
arbitrator. The importance of these safeguards was stressed in
the debates on the 1972 amendments to Title VII. Senator
Dominick, in offering an amendment giving the EEOC the right to
file a civil action in lieu of cease-and-desist powers, explained
that the purpose of the amendment was to "vest adjudicatory power
where it belongs -- in impartial judges shielded from political
winds by life tenure." 1972 Leg. Hist. at 549. The amendment
was later revised in minor respects and adopted by the Senate.
12. Under the Federal Arbitration Act, arbitral awards
may be vacated only for procedural impropriety such as
corruption, fraud, or misconduct. 9 U.S.C. § 10.
Judicially created standards of review allow an arbitral award to
be vacated where it clearly violates a public policy that is
explicit, well-defined, "dominant" and ascertainable from the
law, see United Paperworkers Int'l Union v. Misco, Inc., 484 U.S.
29, 43 (1987), or where it is in "manifest disregard" of the law,
see Wilko v. Swan, 346 U.S. 427, 436-37 (1953). The latter
standard of review has been described by one commentator as "a
virtually insurmountable" hurdle. See Bret F. Randall, The
History, Application, and Policy of the Judicially Created
Standards of Review for Arbitration Awards, 1992 BYU L. Rev. 759,
767. But cf. Cole v. Burns Int=l Sec. Servs., 105 F.3d 1465,
1486-87 (1997) (in the context of mandatory employment
arbitration of statutory disputes, the court interprets judicial
review under the "manifest disregard" standard to be sufficiently
broad to ensure that the law has been properly interpreted and
applied).
13. Congress has recognized the inappropriateness of
ADR where "a definitive or authoritative resolution of the matter
is required for precedential value, and such a proceeding is not
likely to be accepted generally as an authoritative precedent,"
see Alternative Dispute Resolution Act, 5 U.S.C. § 572(b)(1)
(providing for use of ADR by federal administrative agencies
where the parties agree); or where "the case involves complex or
novel legal issues," see Judicial Improvements and Access to
Justice Act, 28 U.S.C. § 652(c)(2) (providing for court-
annexed arbitration; §§ 652(b)(1) and (2) also require the parties'
consent to arbitrate constitutional or statutory civil rights claims).
Similar findings were made by the U.S. Secretary of Labor's Task
Force on Excellence in State and Local Government Through Labor-
Management Cooperation ("Brock Commission"), which was charged
with examining labor-management cooperation in state and local
government. The Task Force's report, "Working Together for
Public Service" (1996) ("Brock Report"), recommended "Quality
Standards and Key Principles for Effective Alternative Dispute
Resolution Systems for Rights Guaranteed by Public Law and for
Other Workplace Disputes" which include that "ADR should normally
not be used in cases that represent tests of significant legal
principles or class action." Brock Report at 82.
14. A survey of employment discrimination arbitration
awards in the securities industry, which requires as a condition
of employment that all brokers resolve employment disputes
through arbitration, found that "employers stand a greater chance
of success in arbitration than in court before a jury" and are
subjected to "smaller" damage awards. See Stuart H. Bompey &
Andrea H. Stempel, Four Years Later: A Look at Compulsory
Arbitration of Employment Discrimination Claims After Gilmer v.
Interstate/Johnson Lane Corp., 21 Empl. Rel. L.J. 21, 43 (autumn
1995).
15. See, e.g., Julius G. Getman, Labor Arbitration and
Dispute Resolution, 88 Yale L.J. 916, 936 (1979) ("an arbitrator
could improve his chances of future selection by deciding
favorably to institutional defendants: as a group, they are more
likely to have knowledge about past decisions and more likely to
be regularly involved in the selection process"); Reginald
Alleyne, Statutory Discrimination Claims: Rights 'Waived' and
Lost in the Arbitration Forum, 13 Hofstra Lab. L.J. 381, 428
(Spring 1996) ("statutory discrimination grievances relegated to
. . . arbitration forums are virtually assured employer-favored
outcomes," given "the manner of selecting, controlling, and
compensating arbitrators, the privacy of the process and how it
catalytically arouses an arbitrator's desire to be acceptable to
one side").
16. Arbitration of labor disputes pursuant to a
collective bargaining agreement is less likely to favor the
employer as a repeat-player because the union, as collective
bargaining representative, is also a repeat-player.
17. See Lisa Bingham, "Employment Arbitration: The
effect of repeat-player status, employee category and gender on
arbitration outcomes," (unpublished study on file with the
author, an assistant professor at Indiana U. School of Public &
Environmental Affairs).
18. Challenged agreements have included provisions
that: (1) impose filing deadlines far shorter than those provided
by statute; (2) limit remedies to "out-of-pocket" damages; (3)
deny any award of attorney's fees to the civil rights claimant,
should s/he prevail; (4) wholly deny or limit punitive and
liquidated damages; (5) limit back pay to a time period much
shorter than that provided by statute; (6) wholly deny or limit
front pay to a time period far shorter than that ordered by
courts; (7) deny any and all discovery; and (8) allow for payment
by each party of one-half of the costs of arbitration and, should
the employer prevail, require the claimant, in the arbitrator's
discretion, to pay the employer's share of arbitration costs as
well.
19. See "Enforcement Guidance on non-waivable employee
rights under Equal Employment Opportunity Commission (EEOC)
statutes," Vol. III EEOC Compl. Man. (BNA) at N:2329 (Apr. 10,
1997).
20. The Commission remains able to bring suit despite the
existence of a mandatory arbitration agreement because it acts
"to vindicate the public interest in preventing employment
discrimination," General Tel., 446 U.S. at 326. Cf. S.Rep. No.
101-263 (1990), reprinted in, Legislative History of The Older
Workers Benefits Protection Act, at 354 (amendment to ADEA §
626(f)(4), which provides that "no waiver agreement may affect
the Commission's rights and responsibilities to enforce [the
ADEA]," was intended "as a clear statement of support for the
principle that the elimination of age discrimination in the
workplace is a matter of public as well as private interest").
As a practical matter, however, the Commission's ability to
litigate is limited by its available resources.
21. Despite conventional wisdom to the contrary, the
financial costs of arbitration can be significant and may
represent no savings over litigation in a judicial forum. These
costs may include the arbitrator's fee and expenses; fees charged
by the entity providing arbitration services, which may include
filing fees and daily administrative fees; space rental fees; and
court reporter fees.
22. The Dunlop Commission similarly supported voluntary forms
of ADR, but based its opposition to mandatory arbitration on the
premise that the avenue of redress for statutory employment
rights should be chosen by the individual rather than dictated by
the employer. Dunlop Report at 33.